Implications of agricultural land degradation to the profitability and competitiveness of subsistence farmers: A comparative study from rural Ethiopia

Abstract

Drawing up on data collected in three districts which represent various agro-ecologies, socio-economic and major farming systems in Ethiopia n 1999/2000 cropping season, this paper examines the competitiveness of smallholder farmers in food crop production. Partial budget analysis was carried out to determine both financial and economic profitability for major crops. Policy Analysis Matrix (PAM) indicators such as NPC, EPC and DRC were employed to scrutinise the incentives generated under a set of existing agricultural policy and competitiveness of smallholder farmer for six major crop-district categories. i.e. sorghum and maize in Alemaya; wheat and barley in Hitosa; and teff (Eragrostis tef) and sorghum in Merhabete. Both financial and economic profitability are the highest for wheat grown in Hitosa, but the other categories have also positive returns. The sociai cost benefit (SCB) ratio and PAM indicators also disclose
that domestic production of food crops enjoys comparative advantage even in regions where productivity is highly constrained by land degradation and also face some policy disincentives.